Thomas Cook: the founder’s good intentions have become an exorbitant burden of responsibility for his followers
On the eve of world tourism day, one of its pioneers, the British tour operator Thomas Cook, left the market…
Among the reasons for its bankruptcy were not only debt and fierce competition, but also politics and even climate change.
The founder of the company, cook, believed that if the railway offered cheaper fares, it would allow more people from a lower class to travel, and thus people would drink less, use less drugs, and reach more for knowledge and education. he tried to make travel easier, cheaper, and safer
Thomas Cook has a long and colorful history. For 178 years, the iconic travel brand, whose clients included mark TWAIN, Oscar Wilde, Rudyard Kipling and Winston Churchill, has been the originator of many initiatives in tourism.
For example, in 1851, the tour operator published the Adventurist, which became the prototype of the tourist catalog, where package travel was first presented. In this brochure, along with the route description, railway fares were included; in 1855, the company was one of the first in the world to organize trips abroad. In 1865, the tour operator opened its first travel Agency in London, selling travel guides, train tickets, and tours, including to Paris, Italy, and Switzerland.
In 1873, Thomas Cook tourists were the first in the world to travel around the world. Around this time, the tour operator was one of the first to introduce travel checks. In 1919, Thomas Cook was the first to launch the sale of tours already based on air transportation.
Creating a travel company, former Baptist preacher Thomas Cook hoped that his brainchild would make society better.
“For cook, travel was about social growth. In those days, only rich people could afford to travel. Cook believed that if the railway offered cheaper fares, it would allow more people from a lower class to travel, and thus people would drink less, use less drugs, and reach more for knowledge and education. He was trying to make travel easier, cheaper and safer, ” said Thomas Cook archivist Paul Smith.
In the first quarter of the 20th century, Thomas Cook dominated the tourist market, but in 1928 the business was taken over by the Belgian international company Wagons-Lites et Grands Express, which operated Orient Express. During the Second world war, the tour operators ‘ assets were requisitioned by the British government, and later sold to 4m major railway companies in the UK. When they were nationalized after the war in 1948, Thomas Cook became state property. In 1965, the tour operator’s profit exceeded 1 million pounds. In 1972, Thomas Cook became a private company again. In 1992, Thomas Cook was sold to a pool of investors, but 9 years later, the German travel group C&N tourist AG became the sole owner of Thomas Cook, changing its name to Thomas Cook AG.
6 years later, in 2007, as a result of the merger of Thomas Cook AG and MyTravel Group plc, which had debts of 1.1 billion pounds, Thomas Cook Group was formed. But in recent years, due to increased competition in the market, the development of the independent travel market and the online sales segment, as well as the growth of the debt of MyTravel Group plc, the tour operator’s business was not so successful. Over the past 3 years, it has closed several hundred branded agencies, and its retail network has shrunk to 550 offices.
The total cost of holiday insurance guarantees that must be paid to Thomas Cook customers under the ATOL tour insurance scheme is estimated at 600 million pounds
The bankruptcy turned out to have great social and economic consequences for the British market: 150 thousand British holidaymakers will be returned from abroad, and 9 thousand people will be left without work. The campaign to evacuate tourists, codenamed Operation Matterhorn, is already being described as the UK’s largest peacetime repatriation. All British carriers, including British Airways and easyJet, will be involved in the export of tourists. Tourists will have to be exported from almost all over the world: these are cities and resorts in mainland Europe, North Africa, the Middle East,the United States and the Caribbean.
The evacuation will take 2 weeks: it should be completed by October 6. Already today, on September 23, 14 thousand people will be taken out. For this purpose, 40 aircraft are involved.
As of September 2019, the tour operator’s debts were estimated at 1.7 billion pounds. The company agreed with China’s Fosun to raise 900 million pounds, but state-owned creditor banks last week demanded another 200 million pounds to ensure the financial stability of the debt. Thomas Cook couldn’t find them.
The total cost of holiday insurance guarantees that must be paid to Thomas Cook customers under the ATOL tour insurance scheme is estimated at 600 million pounds. Taking into account the cost of evacuating tourists, the bankruptcy of Thomas Cook will cost Britain at least 750 million pounds. According to experts, the cost of the rescue operation may exceed 200 million pounds: this is more than the tour operator asked the government of the country.
In total, the group employs 21,000 people, most of whom are located in the UK. About 600,000 of the group’s clients are currently abroad, including tourists from Germany and Scandinavia.
Recall that the Russian tour operators Intourist and Biblio-Globus associated with Thomas Cook reported continuing their activities as usual.
Billions of dollars of debt due to the merger with MyTravel in 2007, the Internet revolution of online booking without contacting a tour operator, the low efficiency of the structure of the entire Thomas Cook business, the Brexit policy against the background of questions about the UK’s exit from the EU, the heat wave in Europe in 2018-2019 served as a “Domino” effect for the Thomas Cook business
British experts, analyzing the failure of Thomas Cook, blame both state-owned banks and the government’s lack of desire to provide state guarantees for 200 million pounds
In their opinion, Thomas Cook was the victim of several circumstances. First, this is the same billion-dollar debt due to the merger with MyTravel in 2007: in may, the group reported a loss of 1.5 billion pounds already due to this transaction. Attempts to sell the airline for 850 million pounds to pay off some of the debts, to no avail. Since 2011, Thomas Cook has paid out £ 1.2 billion in interest alone, meaning that more than 25% of the 11 million tours it sold each year went into the pockets of creditors.
Second, the tour operator has been let down by the Internet revolution: more and more Britons are booking holidays online without contacting tour operators. According to the Association of travel agencies in the UK, only 1 in 7 tourists now apply to a travel Agency to buy a tour. And these are people over 65 years of age or representatives of more “budget” categories of tourists who spend less money on vacation.
Many see the reason for the bankruptcy as a complex and inefficient structure of the entire business: Thomas Cook also owned its own planes, which is convenient at the height of the season, but means that the tour operator incurs high costs throughout the year.
Let down the tour operator and policy, namely Brexit: against the background of questions about the UK’s exit from the EU and the fall of the pound against the Euro and the dollar for the mass British tourist travel abroad has risen in price. In 2019, one in 10 Britons refused to go on holiday for this reason.
Climate change has also contributed. A heatwave in Europe in 2018-2019 has sharply reduced demand for beach holidays, as tourists put off holiday decisions while enjoying record temperatures at home.
In the UK, it is feared that the bankruptcy of Thomas Cook will have a Domino effect on the entire industry: tour operators and agents are waiting for a decrease in demand, as well as financial problems of partners, hotels and other participants in this chain. Recall that the fate of the group’s hotel portfolio remains unclear.
Source: http://tourweek.ru/articles/world/312404 / © Tourweek.ru